GameStop Is Surging, But Are They Willing To Make Hard Changes?

GameStop Corp. shares are surging today and are currently up over 30%:

Chewy co-founder and GameStop board member Ryan Cohen is taking a bigger role, which is driving today’s gains:

GameStop Corp. shares extended their rally after the company tapped founder Ryan Cohen to guide its transition to an e-commerce business.

Cohen, a director at the video-game retailer, will chair a new board committee tasked with the transformation, the company said in a statement Monday, confirming an earlier report by Bloomberg News.

But GameStop is still losing hundreds of millions of dollars a year, continuing a trend that predates COVID. It has 5,000 stores that are dinosaurs in an e-commerce driven world. Formation of a committee is nice and all, but this doesn’t mean any real change right now. And certainly not enough to make a money losing, moribund company worth 30% more than it was yesterday.

Even if they decided to close all their stores tomorrow, they’d still be on the hook for years’ worth of rent. A typical commercial lease lasts 3-5 years, locking in this cash-incinerating business model for quite some time.

For more on GameStop, check out these posts:

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Photo: “GameStop” by JeepersMedia is licensed under CC BY 2.0


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